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In a decision delving into abstract areas of Russian and U.S. law, a federal judge has turned down a Russian agency’s attempt to wrestle control of copyrights held to be legitimately granted to a U.S. company. Eastern District of New York Judge David Trager rejected a motion by the Russian agency to apply the so-called act of state doctrine in its favor. The doctrine requires U.S. courts to defer to foreign government actions on their own soil. In Films by Jove Inc. v. Berov, 98-CV-7674, Judge Trager described the moves by the Russian entity as an attempt to take property rightly belonging to the American company. The dispute started 12 years ago when a California company, Films by Jove Inc., bought the copyright to Soviet-made animated films for worldwide distribution outside the former Soviet states. Jove made the deal with the legal heir to the State Film Studio, which once owned the movies. In 1998, Jove filed a copyright infringement suit against Joseph Berov — the decision does not explain why. Berov did not contest the infringement allegation. Instead, explained Trager, he deferred to a third-party suit against Jove initiated by a Russian state agency, Federal State Unitarian Enterprise Soyuzmultfilm Studio. That entity claimed that the one that sold Jove the copyrights was not the legal heir to the State Film Studio, so the 1992 contract was invalid. This move triggered two rounds of litigation in Trager’s court, both won by Jove. In the first, Jove called on the judge to interpret Russian copyright law. His ruling, which involved an analysis of Russian court opinions, held that the 1992 transfer to Jove was legal. The second, brought by the Unitarian studio, was an attempt to undo that decision. It relied on the fact that a Russian court had overturned the decisions that Trager had relied upon. Trager turned down Unitarian’s request. He questioned the accuracy of the Russian court’s ruling and saw it as an effort “on the part of the Russian government to improperly use the courts to recapture property rights lost during privatization in Russia, and thereby expropriate without compensation the plaintiff’s property rights.” Trager showed the same skepticism in the latest ruling, on Nov. 5. A few weeks after Trager’s second ruling, the Russian government issued a directive meant to clarify gaps in laws handling the transfer of the films. Carrying the weight of a regulation, the changes in the law “purport to establish that the government of the Russian Federation transferred the copyrights in the films to [Unitarian] in 1999,” Trager said. A court in Russia validated the changes on the same day. The action did not have the desired effect. “[I]t provides further evidence of continued actions being taken by the Russian government and judiciary to influence the outcome of this United States litigation,” Trager held, “with the purpose of depriving plaintiff … of its right to distribute the animated films.” Trager rejected Unitarian’s reliance on the act of state doctrine. Unitarian asked the court to defer, under the doctrine, to the Russian government and court. The doctrine is meant to defer to foreign sovereigns to smooth the operation of U.S. foreign policy, said Trager. It is rooted in the separation of powers between the executive and judiciary branches so that U.S. courts do not encroach on foreign relations established by the presidency. The judge declined to apply the doctrine. “It would contradict the very principles at the foundation of the separation of powers doctrine to allow a foreign state under the cover of the act of state doctrine to engage in activities that United States courts would not tolerate from the American legislature,” he wrote. He said the U.S. system would not tolerate manipulation of the judiciary by other branches of the government and he could not countenance such “improper influence” by Russia. Applying a complicated set of principles in which the court partially relied on a ruling from an English court, Trager held that the act of state doctrine applies only on foreign soil but Jove’s rights rest in the United States. Julian Lowenfeld of Manhattan and Kenneth Feinswog of Los Angeles represented Jove. Paul Levenson of Kaplan & Levenson represented Berov and other defendants. Robert Clarida of Cowan, Liebowitz & Latman represented Unitarian.

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